Skip to Content

Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by National Association of Securities Dealers, Inc. Relating to Extension of Time To Pass the Series 55 Examination, Equity Trader

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble April 28, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] notice is hereby given that on April 27, 2000, the National Association of Start Printed Page 26257Securities Dealers, Inc. (“NASD” or “Association”), through its wholly-owned subsidiary, NASD Regulation, Inc. (“NASD Regulation”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD Regulation. NASD Regulation has designated this proposal as one constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule under section 19(b)(3)(A)(i) of the Act and Rule 19b-4(f)(1) thereunder, which renders the rule effective upon the Commission's receipt of this filing. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of The Terms of Substance of the Proposed Rule Change

NASD Regulation is proposing to amend NASD Rule 1032(f) to change the date by which certain registered representatives who trade equity securities in the Nasdaq Stock Market (“Nasdaq”) and/or over-the-counter must pass the Series 55 Examination. The text of the proposed rule change is available at the offices of the NASD and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, And Statutory Basis for the Proposed Rule Change

In its filing with the Commission, NASD Regulation included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD Regulation has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

On January 2, 1998, the SEC approved File No. SR-NASD-97-221, which proposed amending NASD Rule 1032 to add an additional category of representative registration.[3] Specifically, Rule 1032(f) requires each registered representative who engages in proprietary or agency trades of equities, preferred securities, or convertible debt securities otherwise than on a securities exchange, or who directly supervises such activities (i.e., functioning as an “Equity Trader”), to register as a Limited Representative-Equity Trader. In order to register as a Limited Representative-Equity Trader, the representative must be registered as a General Securities Representative (Series 7) or as a Limited Representative-Corporate Securities (Series 62), and must pass the Series 55 Examination.[4] The rule contains an exemption for representatives whose principal trading activities involve executing orders on behalf of an affiliated investment company that is registered with the SEC under the Investment Company Act of 1940.

Rule 1032 affords certain registered representatives a two-year grace period, ending on May 1, 2000, to pass the Series 55 Examination. NASD Regulation believed this would provide such representatives sufficient time to pass the examination. Unfortunately, this has not been the case. It has come to NASD Regulation's attention that many registered representatives who are eligible for the two-year grace period will not pass the Series 55 Examination by May 1, 2000. If the deadline is not extended, these registered persons will be forced to cease certain trading activities, which could cause disruptions at NASD member firms and could cause harm to customers. NASD Regulation does not believe the markets or customers will be served by a strict application of this deadline. Consequently, NASD Regulation is proposing to extend the grace period for passing the examination. NASD Regulation is proposing that registered representatives who were eligible for the two-year grace period, but who failed to pass the Series 55 Examination, be given until October 1, 2000 to pass the examination. However, such representatives will not be permitted to function as Equity Traders after October 1, 2000 unless they receive passing scores on the Series 55 Examination.

2. Statutory Basis

NASD Regulation believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act,[5] which requires, among other things, that the Association's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD Regulation believes that the failure to extend the deadline to pass the Series 55 Examination will cause disruptions at some NASD member firms and could cause harm to customers. NASD Regulation does not believe the markets or customers will be served by a strict application of this deadline.

B. Self-Regulatory Organization's Statement on Burden on Competition

NASD Regulation represents that it does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

NASD Regulation has neither solicited nor received written comments on the proposed rule change.

III. Date of Effectiveness of The Proposed Rule Change And Timing for Commission Action

The proposed rule change is effective upon filing pursuant to section 19(b)(3)(A) of the Act [6] and Rule 19b-4(f)(1) [7] thereunder, in that the proposed rule change is a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. At any time within 60 days of this filing, the Commission may summarily abrogate this proposal if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the Start Printed Page 26258public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to File No. SR-NASD-00-25 and should be submitted by May 26, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[8]

Jonathan G. Katz,

Secretary.

End Signature End Preamble

Footnotes

3.  Securities Exchange Act Release No. 39516, 63 FR 1520 (January 9, 1998).

Back to Citation

4.  Representatives who have been “grandfathered” from taking the Series 7 or the Series 62 Examinations will not be required to take either examination in order to take the Series 55.

Back to Citation

[FR Doc. 00-11255 Filed 5-04-00; 8:45 am]

BILLING CODE 8010-01-M